The German chemical company BASF SE has reportedly announced that it has inked a Memorandum of Understanding (MoU) with a Chinese Petroleum & Chemical firm Sinopec Corporation to construct a steam cracker in the eastern region of China.
Reports cite, the latest deal is the German company’s second major pledge of investment in China – the world’s largest chemical consumer – in four months. According to a press release by the company, BASF-YPC would be investing in a 50% stake to construct a second steam cracker that will have a capacity of producing over 1,000,000 metric tons of ethylene each year. Meanwhile, SINOPEC Yangtzi Petrochemical (YPC) would be investing the remaining 50% stake. Both firms would have access to the products of the steam cracker facility to develop their own downstream product portfolios.
The Chief Executive of BASF, Martin Brudermueller stated that the investment into the new steam cracker facility along with the expansion of the BASF-YPC joint venture (JV) in the city of Nanjing is a testament of the company’s strong partnership with Sinopec and its commitment to the customers in China.
For the record, ethylene is a basic building block for rubber, synthetic fiber, and plastic. China is facilitating better access to its expansive chemicals market to local independents and major global players to feed the coatings, plastics, adhesives, polyesters as well as the rapidly growing consumer electronics and automotive industries.
Reportedly, the German company’s previous deal was in July 2018, where it landed a preliminary deal to construct a chemicals’ complex that is completely foreign-owned in Guangdong, China. The deal is worth over $10 billion in investment and was partially fueled by the trade tensions between Washington and Beijing.
According to reports, the financial details related to the latest deal have not been released yet.